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Spain's Regulation for Online Investing: A Good Case

5/7/2015

 
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Last week, about one year after Spain released its first draft of a legal framework for online investing, the local Parliament approved a second improved version, which is seen by many as providing better conditions for the sector to grow.

The approved draft removed some previous requirments considered by the public as big obstacles to the use of online investing both for SMEs and investors. In particular, the following rules have been introduced:
  • Taking as example the US and UK legislations, Spain now makes a distinction between “accredited investors” and non accredited ones (i.e. retail investors). According to the new rules, are eligible to become accredited investors: 
                 -All the institutional investors;
                 -The medium and large enterprise with at least assets for  €1 million, revenues of €2 million or equity                       capital of € 300,000; 
                 -All the individuals with at least €50,000 income per year or with net assets of minimum €100,000                             value.
  • Retail investors can now invest up to €10,000 per year with a limit of €3,000 per issuer. There is no more a cap on investment for accredited investors.
  • The maximum funding amount for companies has been increased from €1 million to €2 million, unless they target exclusively accredited investors, in which case the limit goes up to €5 million.
  • Online investing platforms have to register with the Spanish financial authority, Comisión Nacional del Mercado de Valores (CNMV), and need a minimum capital of €60,000 or a social responsibility insurance with a minimum coverage of € 300,000 for complaint about damages and a total of € 400,000 per year for any complaints. Their transparency requirements have been made less strict, for example, digital investing portals can now show relevant information concerning their activity by simply displaying it on a page within their website.

A significant improvement, also compared to other regulations in the EU, is that the Spanish rules allow companies incorporated in any country of the European Union to raise funds through local online investing platforms. This is something new to crowdfunding regulations that have been published so far in the world: an important initiative to make this market a little bit more international.


References

Munoz, R. (2015). El Parlamento amplía los límites de la financiación por ‘crowdfunding’.

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About the author - Irene Tordera

Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.




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